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Officials warn to check tax withholdings before 2019

Posted at 4:11 PM, Aug 02, 2018
and last updated 2018-08-02 18:34:25-04

KANSAS CITY, Mo. -- A report released by the Government Accountability Office found 30 million taxpayers, or about 21 percent, will owe the IRS next year because employers aren't taking enough out of their paychecks. 

A proportion of taxpayers are underwithheld every year, but the GAO report found the number is increasing this year because of the 2017 Tax Cuts and Jobs Act.

"You really just need to be aware of those changes and figure out how it's going to impact you specifically," Nathan Rigney, H&R Block Lead Tax Research Analyst, told 41 Action News.

Rigney said one change you may have already seen in your bank account comes from new tax withholding tables that went into effect earlier this year. 

"That made withholding go down, so it made everyone's take home pay go up. Great, right? Except for some people, their withholding won't be enough to cover their tax liability," he said.

That means they'll owe money to the IRS next spring.

 The good news is that there are steps you can take right now to minimize the lump sum due next year. 

Through the IRS Tax Withholding Calculator, you can figure out how much should be withheld from each paycheck under the new rules. If it's different than the amount currently withheld, you'll need to fill out a new W-4 for your employer.

If you make the changes now, you won't have as much to pay back next tax season.

"It makes your paycheck go down a little bit, but it saves you from having to really reach into your savings account during tax season and pay a big balance due," Rigney explained. 

The GAO report also found 73 percent of taxpayers will get refunds from the IRS next year, compared to 76 percent if the new tax bill had not passed.